Chinese economic growth is now showing signs of having bottomed out, said the latest research note issued by Swiss multinational investment bank UBS AG on Monday.

UBS said the expectation-beating Chinese purchasing managers' index (PMI) for March is in line with the bank's expectations for only a controlled slowdown in China that won't derail the global economy or markets.

The recovery in Chinese March PMI extends beyond typical seasonal outperformance after Chinese Lunar New Year, the UBS said, adding that sub-index readings reflect improvements across the board.

UBS forecasts that Chinese economy would expand 6.1 percent in 2019 as China's monetary policy easing and fiscal stimulus measures offer an improved macro outlook for the second quarter of 2019.

"China's more nuanced approach to stimulus this time around has nonetheless translated into a pronounced market bounce," UBS said.

The bank maintains a moderately risk-on stance on Chinese stock markets with both H-shares and A-shares attractive on an equity risk premium basis.

Still, Chinese stock markets face risks from on-going China-U.S. trade talks, more measured stimulus policies from the government and earnings downgrade cycle with listed companies, according to the research note.

The PMI for China's manufacturing sector rebounded to the expansionary territory of 50.5 in March, up from 49.2 in February, according to data issued by the National Bureau of Statistics on Sunday.